Chase Enhances Competitive Positioning of Liquid

Navigator Edition: September 2015
By: Bob Rohr

Investment in general purpose reloadable (GPR) cards by banks slowed in 2014, following a flurry of activity between 2011 and 2013, and banks appeared to be ceding the market to specialist providers like Green Dot, netSpend, and American Express. JPMorgan Chase, however, does not seem to be giving up just yet. With the recent announcement that it is expanding the functionality of its GPR card, Liquid, Chase appears to be trading the product’s Durbin-exempt interchange qualification for an enhanced value proposition.

Many banks, particularly those with more than $10Bn in assets, entered the GPR space in the wake of the Durbin Amendment (see Figure 1). These product launches offered both new and existing customers an attractive product that was not subject to interchange caps. However, these new products, in many cases, have struggled to compete against specialty providers and exempt institutions such as GreenDot, netSpend, and American Express. These providers maintain a strategic focus on prepaid, and their products offer a full-suite of payment features, including bill pay and non-card based account transfers. Large banks, however, are restricted from providing non-card based access to funds in a GPR card account (e.g., via ACH or checks) to qualify for exempt interchange under Reg II. For these and other reasons, bank-issued GPR cards have not gained traction in the way many had hoped, and today most banks view GPR cards as a niche product.

Figure 1: Notable General Purpose Reloadable Launches

Fig-1_-Notable-GPR-Prepaid-Program-LaunchesNote: Although technically a bank, American Express is categorized as a non-bank because of its lack of a traditional branch structure and DDA product suite.
Source: First Annapolis Consulting research; SNL; provider websites.

Even Chase, which invested heavily in the development and roll-out of Liquid, has not succeeded in establishing significant share in the GPR market. Liquid launched with superior features compared to most competitors, including integration into its branch/ATM network and mobile application, instant issuance at the time of account opening, and a wide variety of load options (including mobile check deposits). Liquid currently has the largest market share of all bank-issued GPR cards at 4%, but that figure is small relative to the leading specialty providers (see Figure 2).

Figure 2: 2014 Estimated GPR Market Share
Total Cards in Circulation = 16.1MM

Fig-2_-2014-Estimated-GPR-Market-Share-by-Cards1‘All Other’ includes, but is not limited to: Amscot Financial, Banking Up, BB&T, BBVA Compass,, CheckFreePay, Commerce Bank, EPS Financial, Euronet/Ria Financial, Fifth Third, FirstView Financial, Galileo/Walgreens, IDT, IPS Nevada (Moneytree), Kaiku Finance, Kinecta FCU, Kroger Personal Finance, MetaBank, Metropolitan Commercial, NFCU, NexisCard, One Global Finance, Origins Financial Services, PAL Card Minnesota, PayDay One, Payment Data Systems, Pay-O-Matic, Pentius, PLS Financial, PNC, Praxell, PreCash, Prepaidian, Regions Bank, Republic Bank, Rev North America, SpeedyCash, SunTrust, Synchology, TransCard, Unirush,Univision, U.S. Bank, Wave Crest, Wipit (Sprint/Boost).
Source: Company websites & press releases, First Annapolis Consulting analysis.

Chase may be hoping to improve its position with its recent announcement that it will be expanding Liquid’s functionality. Starting in November, Liquid customers will have access to a number of new features, including:

  • Online bill pay at or using the Chase Mobile app;
  • Chase QuickPay to send money to other people (including non-Chase customers); and,
  • Account-to-Account transfers to transfer funds out of Chase Liquid to other Chase accounts.

Chase appears to be re-focusing on Liquid as a core component of its retail banking product suite. Adding bank bill pay and transfers further blurs the lines between a reloadable prepaid card and a traditional checking account, making the product more attractive to both banked and underbanked customers. Enabling these features will improve the product’s competitiveness and overall utility—but doing so also means Liquid will likely no longer meet the requirements for exempt interchange under Reg II. Chase is likely hoping that the benefits derived from increased engagement and competitive positioning will outweigh the reduction in interchange rates.

Whether this strategy will be successful—and whether other banks will follow suit—remains to be seen. Nevertheless, this move suggests that a least one leading bank is not yet willing to cede the GPR market to specialists.

For more information, please contact Bob Rohr, Senior Consultant,, specializing in Debit and Prepaid.

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